Business & Occupation Tax Information

The City of Mercer Island collects a business and occupation (B&O) tax, which is a tax on gross revenues earned each tax year. All businesses doing business in the city, whether located in Mercer Island or outside the city limits, must have a Mercer Island endorsement on their State business license. Although there are exemptions, every person, firm, association, or corporation doing business in the city is subject to the B&O tax.

Taxpayers are required to file an annual B&O Tax return by April 15th for the prior tax year. Taxpayers are required to file a quarterly B&O Tax return by January 31st for the prior tax year. Those taxpayers earning in excess of $1.0 million a year are required to remit quarterly B&O tax returns. The Business and Occupation tax rates, as established by City Resolution, are as follows:

The City of Mercer Island Business and Occupation tax code complies with all provisions related to Washington State rules regarding “allocation” and “apportionment” of income. In general, gross income for tax purposes should be allocated to the location where the business activity takes place. See section 4.10.065 and 4.10.067 of the City’s code for more information.

The Mercer Island B&O tax is not the same as the Washington state B&O tax. You must file your Mercer Island taxes separate from your state taxes. Guidance on income apportionment and attributing income for state B&O taxes can be found on the Department of Revenue website.

Additional information and specifics related to your business may be obtained in Chapter 4.10 of the Mercer Island City Code or by contacting the City’s Finance Department at 206-275-7602.